Overall annual U.S. inflation was unchanged in July, largely cementing a cut in interest rates by the U.S. Federal Reserve in September.
According to data from the Bureau of Economic Analysis, the personal consumption expenditures (PCE) price index came in at 2.5% in July, unchanged from the prior month, and below the 2.6% expected.
Stripping out volatile items like food and fuel, the year-on-year “core” gauge, — widely known as the Fed’s preferred gauge of inflation — was also unchanged at 2.6%, below the 2.7% expected.
Month-on-month, both figures rose by 0.2%.
Speaking at the Fed’s annual Jackson Hole symposium last week, Fed Chair Jerome Powell acknowledged recent progress on inflation and said that “the time has come for policy to adjust.”
This has been taken by the markets as all but guaranteeing a rate cut at next month’s policy meeting, which would be the first such cut in over four years.
This level of inflation is unlikely to stop the Fed policymakers from rubber stamping an interest rate reduction from more than two-decade highs, but could impact the number of cuts this year, especially after second-quarter gross domestic product was revised slightly higher earlier this week.
